Apple may have shipped 2.5 million Macs in spring thanks to Vista

The poor reception of Windows Vista, along with a strong Mac OS X, will help Apple continue to ship Macs at three times the industry average by the end of the spring, according to BMO Capital Markets.

While most observers are focusing on iPhone 3G, it's the Mac sales that should help drive Apple's quarter ending in June, BMO analyst Keith Bachman explains in an investment note.

The researcher maintains that Apple should ship between 2.4 to 2.5 million Macs over the three-month period and that this would equate to about a 39 percent year-over-year surge in Mac shipments -- 3.2 times the predicted industry average of just 12.2 percent.

Competitive pricing plays a part in the increased sales. Bachman notes that while Apple's lineup isn't always immediately comparable, a 2.4GHz MacBook at $1,300 is often priced only a few dollars more than the average $1,292 paid for a 13-inch notebook while running faster than most; other configurations trade storage for speed but are still close enough to sway some buyers.

Ironically, however, it may be Microsoft driving customers into Apple's hands. Ongoing jitters regarding bugs and performance in Windows Vista a year and a half after its launch are believed to be driving would-be Windows upgrade customers towards Macs, which are considered by the analyst to be less problematic, simpler, and more secure.

"Thus far, user satisfaction ratings for Vista have been weak, and startup times for Vista have been known to be much slower than the Mac OS X," Bachman says. "Thus, more than 50% of recent customers buying Macs in Apple retail stores are first-time buyers."

He adds that the combined effect of better hardware and software should spill over into 2009, where Macs will help Apple grow shipments 26 percent year over year and could result in just over 3.9 percent world marketshare.

BMO's researcher also estimates more positive news for Apple as a whole in the short term, including the predicted launch of new MacBooks in August that should spark more sales, a halo effect stemming from iPhone 3G, and retail expansion through coming months that increases Apple's exposure in the marketplace.

Notably, Bachman also raises the possibility of an iPhone 3G shortage between launch and the end of July. Although it would limit sales in the short term, it could paradoxically help Apple's share price by suggesting a warm reception to the cellphone's release.

"We believe it is quite possible Apple will run out of phones, post the July 11 launch [but] in the month of July, given some recent production yield issues," he says. "However, we

believe that Apple will be able to catch up with phone demand during the quarter. Hence, from

a stock perspective, near-term lack of availability issues could end up being positive... with headlines reading something akin to near-term demand outpaces supply."

Comments

Between ever-slipping ship dates, features disappearing from beta versions at the launch and the inevitable trouble caused from trying to be all things to all people (esp. peripheral vendors), it is reasonable to expect that the next Windows version will disappoint, especially in contrast to Apple's well-managed evolution of Mac OS X, which was revolutionary at the start.

So, for the foreseeable future, the question for most people will be whether they prefer the current version of Mac OS X to Windows XP. Microsoft has hit a dead end. If they wish to compete, they are going to have to start from scratch and that may be beyond what that company is able to pull off. We Kool-Aid-drinking, RDF zombies have become acculturated to having to abandon cruft (even if it is not ancient) to keep up with the wishes of our Overlords in Cupertino, but M$ wants every PC be able to run every program ever written and that is just no longer practical.

I've always been proud to be a Mac fan, even when it was unpopular, and now that Apple is really coming on like gangbusters, you may call me smug. Call me what you want, but when you're right, you're right!

I really don't know how else to put this, so I'll just say it. Keith Bachman is an idiot and quite possibly one of the worst analysts covering Apple. Only Toni Sacconaghi and Katy Huberty of Morgan Stanley are worse.

Sorry, but I think analysts should be held accountable for their terrible calls.

Apple will sell about 2.6 million macs this quarter. He says 2.4-2.5. We'll see who's right here.

Also, everyone here really needs to watch out for Katy Huberty. She is easily the worst analyst covering Apple. Here was her predictions for last quarter. I pointed out how dumb her call was before eanrings ever happened:

Morgan Stanley analyst Katy Huberty

Profit: $1.10 per share

Revenue: $6.634 billion

Gross margin: 35.8 percent

Macs: 2.02 million

iPhones: 1.0 million

iPods: 8.5 million

Current rating: Overweight

Price Target: $185

If you look at each line item, she made the worst call on Revenue, Mac Sales, iPhone sales and iPod Sales. When I see worst, I mean out of all analysts, she made the worst call on each of these line items. How one could be so obtuse, is beyond me.

BMO Capital analyst Keith Bachman this morning trimmed his price target for Apple (AAPL) to $140 from $160, noting that ?EPS upside relative to our and the Street estimates will more likely come from margin expansion, and less so revenue upside, which also warrants a lower multiple, in our view.?

Bachman actually upped his EPS estimate for the September 2008 fiscal year to $5.09 from $4.90, but he cut FY 2009 to $6.26 from $6.28. He maintains an Outperform rating on the stock, but says that there is now ?clearly less upside?due to fewer revenue catalysts.?

Echoing similar recent comments from other analysts, Bachman wrote today that demand for both iPods and iPhones ?is weaker than we previously anticipated.? He now sees Apple selling 9.5 million iPods and 1.4 million iPhones in the March quarter, down from his previous estimates of 10.5 million iPods and 2.1 million iPhones. For the fiscal year, he now sees 51.1 million iPods, down from 54.6 million, with 7.7 million iPhones, down from 9.3 million. For the calendar year, he now sees 8.5 million iPhones, short of the company?s target of 10 million.

On the other hand, he now sees the company selling 2.06 million Macs in the quarter, up from 1.87 million. For FY ?08, he goes to 9.4 million from 9.1 million, and for ?09, to 11.55 million from 10.99 million.

Notice he predicted 2.06m Macs, 9.5m iPods and 1.4m iPhones sold in Q2. That's just irrational. Also, notice his prediction for 2009. He thinks Apple is only going to sell 11.55 million iPhones. You can't trust an analyst who can't think objectively and clearly when the market sentiment turns bearish. Analysts really need to be able to analyze the data standing alone. Analysts who allow their financial reasoning to become affected by the mood on Wall Street should be ignored. He shouldn't be allowed to make such awful predictions when the mood is negative and then come out and make obscene revisions to those estimates once the mood on Wall Street becomes positive.

Look at this quote:

Bachman actually upped his EPS estimate for the September 2008 fiscal year to $5.09 from $4.90, but he cut FY 2009 to $6.26 from $6.28. He maintains an Outperform rating on the stock, but says that there is now ?clearly less upside?due to fewer revenue catalysts.?

He sees fewer revenue catalysts going into a year where Apple might quite possibly be seeing its second golden age. Man that's annoying.

Wasn't mac market share growing at 30% even before Vista came out? The whole premise of the article is wrong - Vista didn't cause apple to jump from 12% growth to 30% growth, Apple was already at 30% growth.

Wasn't mac market share growing at 30% even before Vista came out? The whole premise of the article is wrong - Vista didn't cause apple to jump from 12% growth to 30% growth, Apple was already at 30% growth.

That's rather insulting or just plain dumb to say that Vista's failure causes Mac's success and not Mac itself. WTF?

Well, it would perhaps have been better to say that Vista's lack of success allowed Apple to continue their growth unchecked. In the 90's, many blame Windows 95's "good enough" and "so much better than the God-awful 3.1 interface" with reversing the Mac's growth. I think some were wondering if Vista could do the same. It's now obvious it won't.

The iphone and iPod Touch have far more to do with the growing success of Apple Mac's than Vista.

Although with all of the criticism that Microsoft has received due to problems with Vista this may very well have been on potential buyers minds when they are looking for new systems, (combined with the fact that it has become increasingly more difficult for your average buyer to pick up a PC with windows XP on it) and may have made them look at Mac systems as an alternative.

The iphone and iPod Touch have far more to do with the growing success of Apple Mac's than Vista.

Although with all of the criticism that Microsoft has received due to problems with Vista this may very well have been on potential buyers minds when they are looking for new systems, (combined with the fact that it has become increasingly more difficult for your average buyer to pick up a PC with windows XP on it) and may have made them look at Mac systems as an alternative.

Methinks the MSM, in its sheeple way, has hopped on the "Mac rules" fanboi bandwagon just as surely as it was on the "Cash Apple out and return the assets to the shareholders" bandwagon a few years ago.

If they were actually paying attention to the palpable decline in the quality of the OS since Avie Tevanian "moved upstairs" on completing Panther, they'd be writing snarky articles with titles like "Leopard: Vista for the Mac?" and "Mac OS X Vista -- Leopard catches cat flu"

Apple better had not get any more complacent; sooner or later even the stenographers of the MSM will figure it out.

Funny how advertising works like politics; just as Karl Rove mastered the art of projection as an advertising tactic, so has Apple. Leopard is the buggiest Mac OS release in seven or eight years; so why not cut a whole bunch of ads depicting Mr. PC in the IT emergency room requiring a driver transplant because of Vista.

Funny how advertising works like politics; just as Karl Rove mastered the art of projection as an advertising tactic, so has Apple.

Funny how people still tend to put forth the name of Karl Rove (who mastered the art of projection as an advertising tactic), when Karl Rove is so 2000. MoveOn. You should be using the name David Axelrod, top advisor to Barack Obama, who currently is the one mastering the art of projection as an advertising tactic. Don't you think?

The day 25% of people try a Mac, Windows will be history in three years.

No friggin' way! PC's are so entrenched in business that they could cause erectile dysfunction, male pattern baldness, and cancer and we'd all still be sitting in front of them during our 9 to 5.

There are huge chunks of the computing market that just plain don't exist on the mac. There is NO real CAD packages available for the mac (ProE, Solidworks, Autodesk Inventor, etc). There are no credible circuit board layout packages available for the mac. There are lots of other areas, where you can't do certain things if you don't use a PC.

So Vista can be a steaming turd (well, it already is), and there is no choice but to use it.

The day 25% of people try a Mac, Windows will be history in three years.

No this is not true; and we should be thankful for it. The natural Mac constituency is about 20% of the population. To reach any further would start to erode the essence of Macdom. I do believe that Apple will become one of the largest, if not the largest companies in the world, but this will be through diffusion into different markets and territories, not through the diffusion of the core brand values. Not in my (or SJ's) lifetime anyway.

Analysts are jerks; some are more jerky than others. The thing to remember is that we are not their target audience, you know, people who actually understand the company. Their focus is to spin a (simplistic, bullshit) narrative to manipulate their clients into positions of trust and dependency.

I really don't think Vista's problems can be seen as something to look down upon, especialy with 10.6 essentially being 10.5 with the bugs fixed. While I really like my MB, it does have its problems just like Vista. I believe the real reason is the number of people looking at Macs while in the store while buying an iPod. They see a prettier, different interface and listen to the stuff from the staff (which often is BS, but thats sales) and this makes them make the jump over.

There are huge chunks of the computing market that just plain don't exist on the mac. There is NO real CAD packages available for the mac (ProE, Solidworks, Autodesk Inventor, etc). There are no credible circuit board layout packages available for the mac. There are lots of other areas, where you can't do certain things if you don't use a PC.

Not exactly true. NX (formerly Unigraphics) is somewhat available on OS X because Apple is one of their customers and they want it that way. The Parasolid kernel is available on OS X and it is just a matter of writing the CAD app on top of it.

The new advantage Apple has is that you can run Windows on Mac hardware. The strategy is ingenious because Apple can get someone like you to buy a Mac to run some of their Windows-only apps, but you can also see how nicely things work on the Mac side. You may then either find a Mac app to replace your specialty app, or demand the vendor make a Mac version.

The day may be sooner than you think that you may be stuck with Windows part-time, but you'll be running it on an erectile-dysfunction-curing Mac! (Who is Alice and where do I go to see her?)